Spencer’s Benefits NetNews – July 14, 2017

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Washington Governor Jay Inslee signed Substitute Senate Bill 5975 on July 5, 2017, to provide a paid family and medical leave program in the state. The new law, which was approved in the state Legislature on June 30, 2017, will be in place by 2020….

The IRS has issued its 2017 Cumulative List of Changes in Plan Qualification Requirements for Pre-Approved Defined Contribution (DC) Plans. The 2017 Cumulative List is to be used by plan sponsors and practitioners submitting opinion letter applications for pre-approved DC plans during the third six-year remedial amendment cycle, which began February 1, 2017 and ends January 31, 2023. DC plans may be submitted for approval during the on-cycle submission period beginning October 1, 2017 and ending October 1, 2018….

A former employer’s motion for summary judgment on a COBRA claim was affirmed by the Eleventh Circuit U.S. Court of Appeals based on its ample evidence of recordkeeping practices. The court added that, even if the former employee never received his COBRA notice, the former employer had met its COBRA obligations….

As Senate Republicans continue work on revising the stalled Better Care Reconciliation Act of 2017 (BCRA), there is talk on Capitol Hill that intraparty consensus on the measure may not be obtained. The BCRA, as currently written, would repeal and replace, in part, the Patient Protection and Affordable Care Act (ACA) and related taxes….

The IRS has updated procedures for requesting opinion letters on the form of qualified retirement plans submitted under the pre-approved plan program. The IRS is simplifying the requirements by restructuring the current master and prototype (M&P) and volume submitter (VS) pre-approved programs into a single opinion letter program. The IRS believes this change increases the types of eligible plans and permits greater flexibility in plan design options. The IRS includes two appendices in the revenue procedure….

The Trump Administration’s Labor Department, headed by Alexander Acosta, is backing off only one part of the controversial “fiduciary rule” under scrutiny in the Fifth Circuit Court of Appeals—a prohibition against contract clauses that would waive an investor’s right to participate in class litigation. Given the change in administration and what increasingly appears to be a more business-friendly environment, there has been much speculation about whether the “new” Labor Department would stand behind the Obama-era regulation and its requirement that retirement advisors conform to certain measures aimed at eliminating conflicts of interest between advisors and their clients….

Texas Supreme Court: Obergefell did not address same-sex benefits for municipal workers, so ‘neither will we’

Finding that the U.S. Supreme Court did not specifically address the issue in its 2015 ruling in Obergefell v. Hodges, the Texas Supreme Court declined to address whether the City of Houston could grant benefits to the same-sex spouses of city workers and sent the case back down to the trial court for further proceedings. Noting the High Court’s decision June 26 in Pavan v. Smith, the Texas Supreme Court wrote that, “[a]lready, the Supreme Court has taken one opportunity to address Obergefell’s impact on an issue it did not address in Obergefell, and there will undoubtedly be others.” In Pavan, the Court held that, having chosen to make its birth certificates more than mere markers of biological relationships and to use them to give married parents a form of legal recognition not available to unmarried parents, the state of Arkansas could not, consistent with Obergefell, deny married same-sex couples that recognition. The issue presented here must work its way through the lower courts, said the Texas Supreme Court in a unanimous ruling, throwing out a lower court ruling finding that spouses of gay and lesbian public employees were entitled to same-sex marriage benefits and ordering the trial court to reconsider the case….

The Department of Labor (DOL) has issued a request for information concerning the fiduciary conflict of interest rules and accompanying exemptions. The DOL has provided a 15-day comment period for issues connected with the extension of the January 1, 2018, applicability date of certain issues. Comments are due on July 21, 2017. The DOL also provided a 30-day comment period for all of the other issues raised in the request for information, and these comments are due on August 7, 2017….

Professionals cutting short or cancelling vacations due to work pressures

According to a June 2017 survey from Korn Ferry, which includes nearly 1,600 responses, 88 percent of professionals say they have cut short or cancelled a vacation due to work pressures. Even if vacations aren’t curtailed, the vast majority of respondents admitted to having one foot in the vacation world, and one in the work world. A full third (34 percent) say they check in with work several times a day, and 41 percent say they check in at least once a day. Only 3 percent say they never check in with work when they are on vacation. The inability to unplug apparently brings up family issues with many, with half the professionals surveyed saying they’ve had arguments with their spouse about being too connected with work while on holiday….

Court erred in finding benign mass on foot could not be ‘serious health condition’ under FMLA

Post-operative appointments for wound care constituted “continuing treatment” of an employee’s benign growth on her foot, which was surgically removed, held the Second Circuit. Vacating summary judgment against her claim that she was fired in retaliation for taking FMLA leave, the appeals court also found that her employer failed to prove her condition did not involve at least three consecutive days of incapacity absent medical treatment. The fact that she worked until the day of her surgery was not dispositive because she and her doctor viewed the condition as worsening. The court remanded so the district court could address the employer’s other arguments….

Best practices for employers facing COBRA issues were offered at a recent Lockton webinar “COBRA: The Law that Bites.” Lockton advised that COBRA is one of the most litigated employee benefit issues, and that most of the cases end in the participant’s favor. Compounding the problem is that the law is often unclear with regard to employer responsibilities. Offering certain health plan features, like access to on-site medical clinics and telemedicine, separately from other group health plan coverage, is one way to avoid COBRA coverage predicaments, they said….

With 60 million CDH accounts in the market as of 2016 and an 11 percent estimated compound annual growth rate (CAGR) from 2014 to 2020, 86 percent of brokers and 74 percent of employers rate consumer directed healthcare (CDH) to be a critical component of their future benefits strategies and an essential tool to combat the rising cost of health benefits, according to a recently-release report from Alegeus. To maximize the impact CDH programs can have, Alegeus says that brokers and employers must be supported to ensure that benefit designs and communication strategies are effective and CDH programs deliver on their promise of cost savings, greater control over healthcare spending, and greater employee satisfaction – rather than a mechanism to purely shift costs….

Timing of layoff maximized employee’s benefits, so no pregnancy bias or FMLA retaliation

Granting summary judgment against a former MetLife employee’s state-law pregnancy discrimination and FMLA claims, a federal district court in Rhode Island pointed out that her layoff was timed to maximize her benefits, it was undisputed that she was the most junior person in her department, she was not replaced after her layoff, the others laid off were male, and other females who took maternity leave were not laid off. Most significantly, the employer first delayed the employee’s layoff, which resulted in her continued employment and health benefits for the remainder of her pregnancy, and then moved up her layoff date by about two weeks so she could qualify for enhanced severance benefits that were only available in 2012….